Seven years ago I did a thesis on demographics and capital flows, which informs my thinking on economics and finance to this day. That’s a long time ago, though, so I thought that I would provide an update on one of the key pillars of that work. It starts with ageing. The breadth and speed of population ageing currently sweeping the global economy is unprecedented in human history. It is partly driven by rising life expectancy, which we can crudely hold to be a linear function of economic development. But it is also a result of a complex fertility transition. Two stylised facts should be highlighted at the outset. Firstly, the demographic transition does not end with a homeostatic “equilibrium” of replacement level fertility. Secondly, the decline in fertility seems to be driven by two forces; the quantum effect which operates on a quantity/quality trade-off and the tempo effect, which is the phenomenon of “missing births” as women postpone having their first child. The two are connected in complex ways, that we probably don’t quite understand. My goal here is to understand what is happening to global fertility rates. My sample is the World Bank’s data and their estimates of total fertility rates across countries.

Investors were forced to endure further distractions at the hands of Brexit and the new U.S. political leadership last week. Theresa May's speech, which lifted the lid slightly on the government's plans for its exit from the EU, and Mr. Trump's inauguration address were undoubtedly the most important events for markets. This tells you all you need to know about how it is to be an investor at the moment. Fear not, though; I am here to help. I won't talk about Mr. Trump or Brexit in this post, but instead ask the question of how equity investors can escape their vortex.